Bill > LD191

This bill establishes a new pass-through entity tax (PTET) in Maine starting January 1, 2025, which allows partnerships and S corporations (business entities where income "passes through" to individual owners) to elect to pay state income tax at the entity level. Under this bill, eligible businesses can choose to pay taxes on their members' income at the company level, with members then receiving a 90% tax credit for the taxes paid by the entity. This approach provides a workaround to federal limitations on state and local tax (SALT) deductions by shifting the tax burden to the business entity. The bill defines key terms like "affected business entity" and "member", and specifies that the tax will be calculated using the highest individual tax rate. Nonresident members may not need to file individual Maine tax returns if their only Maine income comes from an electing pass-through entity. The bill also allows for credits for taxes paid in other jurisdictions and provides that any excess credits can be refunded to members. The tax payment is due by the 15th day of the third month following the close of each tax year, and the state's taxation bureau is authorized to create rules to implement this new tax structure.

Budget and Finance

https://legislature.maine.gov/legis/bills/display_ps.asp?LD=191&snum=132